AI

Generative AI startup AI21 Labs lands $155M at a $1.4B valuation

Comment

Man standing in front of big blue screen with charts and data spread out before him.
Image Credits: Weiquan Lin / Getty Images

AI21 Labs, a Tel Aviv-based startup developing a range of text-generating AI tools, has raised $155 million in a Series C funding round led by Walden Catalyst, Pitango, SCB10X, b2venture, Samsung Next and Amnon Shashua, the founder of Intel-owned Mobileye and an AI21 Labs co-founder. Google and Nvidia also participated.

The tranche, which brings AI21 Labs’ total raised to $283 million, values the company at $1.4 billion — a bit higher than the figure The Information reported earlier today ($1.2 billion).

“AI21 Labs came out of stealth in October 2020 with our first launch of [AI writing tool] Wordtune,” Yoav Shoham, one of AI21 Labs’ co-CEOs, told TechCrunch via email. “Since then, we’ve only managed to grow, more than doubling our workforce with plans to add even more employees.”

AI21 Labs was founded in 2017 by Shashua, Shoham and Ori Goshen, the startup’s other co-CEO. Shoham, a professor emeritus at Stanford, previously sold two companies to Google, the time management app Timeful and social network friends organizer Katango. Goshen is also a serial entrepreneur, having co-founded and led several Israel-based tech companies, including the telco analytics firm Crowdx.

AI21 Labs’ flagship product is AI21 Studio, a pay-as-you-go developer platform for building custom text-based business apps off of AI21’s proprietary text-generating AI models — including its cutting-edge Jurassic-2 model. The startup also sells access to the aforementioned Wordtune, a multilingual reading and writing AI assistant akin to Grammarly.

Customers can tap AI21 Labs’ platform via APIs for specific generative AI use cases, like summarization, paraphrasing and grammar and spelling correction. The startup’s models support a growing number of languages, including Spanish, German, Italian and Dutch.

AI21 Labs competes with an expanding roster of startups and incumbents in the red-hot generative AI space.

Google, AWS and Microsoft offer tooling comparable to AI21 Studio, as do startups like Cohere, OpenAI and Anthropic (and to a lesser extent marketing-focused vendors such as Jasper, Regie and Typeface). And AI21 Labs is at a funding disadvantage; OpenAI has raised $11.3 billion to date, while Anthropic and Cohere have raked in $1.6 billion and $435 million, respectively.

But Shoham asserts that AI21 Labs’ solutions are superior in several aspects, despite looking similar on the surface and not having the benefit of a higher R&D budget.

For one, Shoham says, they’re developed on “some of the world’s largest and most sophisticated large language models” and offer “more refined control” than many generative AI apps on the market. Moreover, they’re trained on up-to-date data, unlike text-generating models trained on older data, which can’t accurately answer questions about current events.

AI21 Labs
AI21 Labs offers a range of tuning parameters to customize the output of its language models, which range from small, fast models to larger and more sophisticated offerings. Image Credits: AI21 Labs

“The AI21’s AI systems are easy to integrate and generate reliable, trustworthy and accurate results,” Shoham said. “The quality and quantity of training data is a huge challenge in the industry. We’ve worked hard to ensure that we’re using up-to-date data, constantly training our models on additional data and working to ensure that the data used is reliable and trustworthy.”

Having not tested AI21 Labs’ products recently, I can’t speak to the veracity of those claims. But exaggerated or no, AI21 Labs appears to be gaining some traction despite its disadvantages.

Shoham — who wouldn’t reveal the size of AI21 Labs’ customer base, save that it includes “several” Fortune 100 companies — says that Wordtune alone has over 10 million users. And AI21 Labs was a launch partner for Bedrock, Amazon’s generative AI app development platform.

Shoham says that the latest funding tranche will allow AI21 Labs to accelerate its R&D efforts and “reach its goal of developing the next level of AI,” with “the capabilities of reasoning across many domains.” AI21 Labs also plans to pursue more partnerships with companies “across the entire tech ecosystem” and increase its 200-person headcount, with a principal focus on roles in research and business development.

AI21 Labs continues to build out its C-Suite, as well, recently hiring Pankaj Dugar, a former Google and Databricks exec, as its SVP of go-to-market and GM of North America.

It’ll certainly need the money, given the capital-intensive nature of developing large language models.

According to The Information, OpenAI spent $540 million last year creating ChatGPT. And AI21 Labs’ own research pegs the expenses for training a text-generating model with 1.5 billion parameters (i.e. variables that the model uses to generate and analyze text) at as much as $1.6 million. For reference, the predecessor to AI21 Labs’ Jurassic-2 model, Jurassic-1, contained 178 billion parameters.

That’s not accounting for hosting costs to serve the models.

OpenAI was at one point reportedly paying up to $700,000 a day to keep the infrastructure hosting ChatGPT up and running. Back-of-the-napkin math pegs the cost of running a model the size of GPT-3, and older OpenAI-developed model, at $87,000 per year on a service like AWS.

AWS counts AI21 Labs as a partner, so it’s not clear if there’s some sort of volume discounting in play. But I’d wager to say that it’s not insignificant overhead.

“We’ve focused on growing responsibly, allowing us to continue to grow and expand, bringing our customers the most up-to-date, trustworthy AI possible,” Shoham said.

More TechCrunch

Meta’s Oversight Board has now extended its scope to include the company’s newest platform, Instagram Threads. Designed as an independent appeals board that hears cases and then makes precedent-setting content…

Meta’s Oversight Board takes its first Threads case

The company says it’s refocusing and prioritizing fewer initiatives that will have the biggest impact on customers and add value to the business.

SeekOut, a recruiting startup last valued at $1.2 billion, lays off 30% of its workforce

The U.K.’s self-proclaimed “world-leading” regulations for self-driving cars are now official, after the Automated Vehicles (AV) Act received royal assent — the final rubber stamp any legislation must go through…

UK’s autonomous vehicle legislation becomes law, paving the way for first driverless cars by 2026

ChatGPT, OpenAI’s text-generating AI chatbot, has taken the world by storm. What started as a tool to hyper-charge productivity through writing essays and code with short text prompts has evolved…

ChatGPT: Everything you need to know about the AI-powered chatbot

SoLo Funds CEO Travis Holoway: “Regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”

Fintech lender SoLo Funds is being sued again by the government over its lending practices

Hard tech startups generate a lot of buzz, but there’s a growing cohort of companies building digital tools squarely focused on making hard tech development faster, more efficient and —…

Rollup wants to be the hardware engineer’s workhorse

TechCrunch Disrupt 2024 is not just about groundbreaking innovations, insightful panels, and visionary speakers — it’s also about listening to YOU, the audience, and what you feel is top of…

Disrupt Audience Choice vote closes Friday

Google says the new SDK would help Google expand on its core mission of connecting the right audience to the right content at the right time.

Google is launching a new Android feature to drive users back into their installed apps

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

OpenAI is removing one of the voices used by ChatGPT after users found that it sounded similar to Scarlett Johansson, the company announced on Monday. The voice, called Sky, is…

OpenAI to remove ChatGPT’s Scarlett Johansson-like voice

The ChatGPT mobile app’s net revenue first jumped 22% on the day of the GPT-4o launch and continued to grow in the following days.

ChatGPT’s mobile app revenue saw its biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

1 day ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine